BCBG Sanctioned In Urban Outfitters' Trademark Suit

A federal judge has awarded Urban Outfitters Inc. $5,000 in sanctions on top of $1.34 million in attorneys' fees in its suit alleging BCBG Max Azria Group Inc. infringed its “Free People” mark, finding that the defendant dragged the litigation on for too long.

Judge Michael M. Baylson of the U.S. District Court for the Eastern District of Pennsylvania granted the Urban Outfitters' request for attorneys' fees and sanctions Monday.

“With respect, the judge just got it wrong,” said M. Kelly Tillery of Pepper Hamilton LLP, who represents BCBG in the matter. “It happens. That's why there is a court of appeals.”

An attorney for Urban Outfitters said Monday he could not comment on the litigation.

Urban Outfitters asked the court to sanction BCBG in April, saying BCBG's objections to the plaintiff's bill for attorneys' fees were frivolous and untimely.

It proposed sanctions in the form of an order directing BCBG to pay all attorneys' fees and expenses incurred since March 2, the date the court awarded partial attorneys' fees for the overall litigation.

Judge Baylson on Monday agreed that sanctions were warranted but opted instead for a lump-sum payment, writing that it would be a “more direct, and final, resolution of this matter in this court.”

The sniping over attorneys' fees is only the latest dispute in the tumultuous case.

The suit dates back to September 2006, when Urban Outfitters, its wholesale arm and its Free People subsidiary sued BCBG and distributor Street Beat Sportswear Inc., claiming BCBG's “True People” mark was substantially similar to the “Free People” mark.

According to the complaint, Urban Outfitters has sold clothing, shoes and accessories under the Free People brand since 1970 and has held the trademark rights to the tag since 1994.

Urban Outfitters discovered BCBG's True People line at a 2006 trade show in Las Vegas, the suit said.

Following a nonjury trial in August 2007, the district court issued a permanent injunction against BCBG. But the judge overseeing the case refused to grant exceptional status to the case and award attorneys' fees to Urban Outfitters, prompting the retail chain to file an appeal with the U.S. Court of Appeals for the Third Circuit.

The Third Circuit in April 2009 upheld the lower court's infringement finding, as well as its dismissal of BCBG's counterclaim seeking cancellation of the “Free People” mark.

However, the appeals court remanded the issue of attorneys' fees, saying, “though the district court indicated it considered BCBG’s discovery misconduct when rejecting Urban Outfitters' claim, the court failed to explain whether it had considered the other examples of BCBG’s chicanery that Urban Outfitters has identified.”

On remand, Judge Baylson awarded Urban Outfitters 50 percent of its total costs and attorneys' fees, finding that while one of BCBG's key witnesses made misrepresentations and acted contemptuously toward the court, other factors precluded the full award.

Urban Outfitters requested sanctions soon after, claiming that it provided BCBG with a copy of its bills and invoices in mid-March but that BCBG did not respond with its objections until March 31, the day after a court-ordered deadline — and that in any case, the objections were vague and irrelevant.